A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-13A-5b, relating
to the use of oil and natural gas severance tax revenues;
setting a baseline of oil and natural gas severance tax
revenue collections; creating the West Virginia Future Fund;
providing for the distribution of funds collected in excess of
that baseline; providing for initial funding of West Virginia
Future Fund to consist of twenty-five percent of excess
proceeds from oil and natural gas severance taxes; expressing
legislative intent not to encumber or otherwise use any
principal or interest from the West Virginia Future Fund for
a term of twenty years; addressing use of the West Virginia
Future Fund; further dedicating three percent of all oil and
natural gas severance tax revenues annually to the oil- and
natural gas-producing counties of origin and their respective
municipalities; establishing state and local oil and gas
county reallocated severance tax funds and providing for
distribution of the moneys to the county commissions and
governing bodies of the municipalities by the State Treasurer;
establishing amounts each oil- and gas-producing county and
their respective municipalities are to receive; requiring the
creation of local funds into which moneys are to be deposited;
requiring moneys to be expended solely for economic
development projects and infrastructure projects; providing
definitions; providing restrictions on the expenditure of
moneys; providing duties of State Tax Commissioner; requiring
report of expenditures to Joint Committee on Government and
Finance; providing audits of distributed funds when authorized
by the Joint Committee on Government and Finance; and
authorizing legislative and emergency rules.

Be it enacted by the Legislature of West Virginia:

That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §11-13A-5b, to read as
follows:

ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.

§11-13A-5b. Setting a baseline of severance tax revenue for
purposes of future tax severance allocation;
Creation of West Virginia Future Fund;
legislative intent; reallocation and dedication
of a percentage of total severance tax for
benefit of oil and gas producing counties and
their municipalities; permissible uses of
distributed revenues; duties of State Treasurer
and State Tax Commissioner; audits; rulemaking.

(a) For fiscal years beginning July 1, 2013, a baseline for
collections of severance tax on the privilege of producing oil and
natural gas levied by section three-a of this article that are
deposited in the General Revenue Fund or that are distributed to
counties and municipalities, as provided in section five-a of this
article, is established at $64.8 million.

(b) There is created in the State Treasury a special revenue
account, designated the "West Virginia Future Fund," which is an
interest-bearing account and may be invested by the West Virginia
Investment Management Board in the manner permitted by the
provisions of article six, chapter twelve of this code, with the
interest income a proper credit to the fund. Notwithstanding any
provision of this code to the contrary, twenty-five percent of the
excess proceeds, above the baseline set by subsection (a) of this
section, received on and after the effective date of this section
as state revenue pursuant to the provisions of section three-a,
article thirteen-a, chapter eleven of this code as a result of
Marcellus Shale production shall be deposited in this fund. The
Legislature may by general appropriation or by designation of other
funding sources to be deposited in the fund provide further funding
as it considers appropriate.

(c) The Legislature declares its intention to use the fund as
a means of conserving a portion of the state’s revenue derived from
the increased revenue proceeds received by the state as a result of
any new oil production and Marcellus Shale and other new gas
formations as well as other funding sources as the Legislature may
designate in order to meet future needs. The Legislature further
declares its intention that the fund should maintain safety of
principal while maximizing total return and that principal and
interest not be used for any purpose other than to meet future
needs that may arise including diversification of the state’s
economy, tax relief, enhancing education and workforce development
and for purposes which other funding sources are not available.
The principal and interest of the Future Fund may not be used for
a term of twenty years in order to allow the fund to reach maximum
accumulation except for the purposes enumerated in this section.

(d) (1) Effective July 1, 2014, one percent of the total tax
attributable to the severance of oil and gas imposed by section
three-a of this article, including any amount in excess of the
baseline set by subsection (a) of this section, shall be
transferred to the county commissions of the oil and gas producing
counties as provided in this subsection.

(2) Effective July 1, 2014, two percent of the total tax
attributable to the severance of oil and gas imposed by section
three-a of this article, including any amount in excess of the
baseline set by subsection (a) of this section, shall be
transferred to the governing bodies of municipalities within the
oil and gas producing counties as provided in this section.

(3) The proceeds dedicated in subdivisions (1) and (2) of this
subsection may not exceed the sum of $20 million per year.

(e) The amounts of the tax dedicated in subsection (d) of this
section shall be deposited, from time to time, into a special fund
known as the Oil and Gas County and Municipality Reallocated
Severance Tax Fund, which is hereby established in the State
Treasury, as the proceeds are received by the State Tax
Commissioner.

(f) The net proceeds of the deposits made into the Oil and Gas
County and Municipality Reallocated Severance Tax Fund shall be
allocated among and distributed quarterly to the oil and gas
producing counties and their respective municipalities by the State
Treasurer in the manner specified in this section. On or before
each distribution date, the State Treasurer shall determine the
total amount of moneys that will be available for distribution to
the respective counties and municipalities entitled to the moneys
on that distribution date. The amount to which an oil and gas
producing county or municipality is entitled from the Oil and Gas
County and Municipality Reallocated Severance Tax Fund shall be
determined in accordance with subsection (g) of this section. After
determining the amount each oil and gas producing county and
municipality are entitled to receive from the fund, a warrant of
the State Auditor for the sum due to each oil and gas producing
county and municipality shall be issued and a check drawn thereon
making payment of that amount to the oil and gas producing county
and municipality by hand, mail commercial delivery or electronic
transmission.

(g) The amount to which an oil and gas producing county or
municipality is entitled from the Oil and Gas County and
Municipality Reallocated Severance Tax Fund shall be determined by:

(1) Dividing the total amount of moneys in the fund then
available for distribution by the total number of barrels of oil
and total number of cubic feet of gas produced in this state during
the preceding quarter; and

(2) Multiplying the quotient thus obtained of each by number
of barrels of oil and number of cubic feet of gas produced in the
county or municipality during the preceding quarter.

(h) (1) No distribution made to a county or municipality under
this section may be deposited into the county’s or municipality’s
General Revenue Fund. The county commission of each county and the
governing body of each municipality receiving a distribution under
this section shall establish a special account to be known as the
“(Name of County or Municipality) Oil and Gas County (or
Municipality) Reallocated Severance Tax Fund” into which all
distributions made to that county or municipality under this
section shall be deposited.

(2) Moneys in the county’s and municipality’s oil and gas
county reallocated severance tax fund shall be expended by the
county commission and governing body of the municipality solely for
economic development projects and infrastructure projects.

(3) For purposes of this section:

(A) “Economic development project” means a project in the
state which is likely to foster economic growth and development in
the area in which the project is developed for commercial,
industrial, community improvement or preservation or other proper
purposes.

(B) “Infrastructure project” means a project in the state
which is likely to foster infrastructure improvements including,
but not limited to, post-mining land use, water or wastewater
facilities or a part thereof, storm water systems, steam, gas,
telephone and telecommunications, broadband development, electric
lines and installations, roads, bridges, railroad spurs, drainage
and flood control facilities, industrial park development or
buildings that promote job creation and retention.

(4) A county commission or governing body of a municipality
may not expend any of the funds available in its oil and gas county
and municipality reallocated severance tax fund for personal
services, for the costs of issuing bonds or for the payment of bond
debt service. Total funds available shall be directed to project
development which may include the costs of architectural and
engineering plans, site assessments, site remediation,
specifications and surveys and other expenses necessary or
incidental to determining the feasibility or practicability of an
economic development project or infrastructure project.

(i) On or before December 31, 2015, and December 1 of each
year thereafter, the county commission of each county and governing
body of each municipality receiving a distribution of funds under
this section shall deliver to the Joint Committee on Government and
Finance a written report setting forth the specific projects for
which those funds were expended during the preceding fiscal year,
a detailed account of those expenditures and a showing that the
expenditures were made for the purposes required by this section.

(j) An audit of funds distributed under this section may be
authorized at any time by the Joint Committee on Government and
Finance to be conducted by the Legislative Auditor at no cost to
the county commission audited.

(k) The State Tax Commissioner shall propose for legislative
approval legislative rules pursuant to article three, chapter
twenty-nine-a of this code for the administration of the provisions
of this section, and is authorized to promulgate emergency rules
for those purposes pursuant to that article.